Analyst: Apple Watch a $26B Business by 2018

By Jeff Gamet

Mar 5th, 2015 11:37 AM EST

Apple Watch could be a US$26 billion business for Apple in only three years, according to Deutsche Bank analyst Sherri Scribner. She thinks Apple will outsell all other smartwatch makers after Apple Watch ships in the coming weeks, although she sees only a limited impact on Apple's overall business from smartwatch sales.

Apple Watch could be a $26 billion business by 2018

While Ms. Scribner sees Apple as the dominant player in the smartwatch market, she thinks the company is too reliant on iPhone sales, and that will limit the company's stock growth. If that sounds familiar, it's because Berenberg analyst Adnaan Ahmad recently said Apple's stock is doomed to drop to $60 because of the company's reliance on iPhone sales.

Mr. Ahmad thinks Apple's value is tied too tightly to iPhone sales, and that it can't continue to sell smartphones as quickly as it does now. He thinks Apple needs to join the race to the bottom to maintain its lead, which completely goes against the company's very successful business model.

Despite her concerns over the iPhone's impact on Apple's bottom line, Ms. Scribner isn't nearly as pessimistic as Mr. Ahmad. Instead, she sees Apple Watch as a valuable part in Apple's money making machine, but one that will live in the shadow of the iPhone. Looking forward to 2018, she expects Apple Watch will account for no more than 10 percent of Apple's sales.

Ms. Scribner has a "Hold" rating on Apple's stock with a $110 target price. Apple is currently trading at $126.79, down 1.75 (1.36%).